EFTA Document EFTA01358963

Page 31 874 F.3d 787, "; 2017 U.S. App. LEXIS 20596, **; Bankr. L. Rep. (CCH) P83,176; 64 Bankr. Ct. Dec. 216 obligation that is meaningfully subordinate in some respect to a first-lien holder. These sophisticated parties knew how to cabin the type of subordination to which they refer; the indenture uses the term "subordinate . . . in right of payment" many times, including in the Baseline Definition itself. 6 Debtors' attempt to downplay the significance of the term in any respect" in this context is unconvincing given that the term appears nowhere else in the indenture other than in the Fourth Proviso. Moreover, the Debtors' interpretation renders language in the indenture superfluous, which is a common sign of ambiguity. See RJE Corp. v. Northville Indus. Corp., 329 F.3d 310, 314 (2d Cir. 2003) ( [HN3] in assessing ambiguity, courts consider the entire contract "to safeguard against adopting an interpretation that would render any individual provision superfluous" (internal quotation marks omitted)); see a/so Lawyers' Fund for Client Protection of State of N.Y. v. Bank Leumi Trust Co. of New York, 94 N.Y.2d 398, 404, 727 N.E.2d 563, 706 N.Y.S.2d 66 (N.Y. 2000) (concluding that an interpretation that renders a portion of a contract superfluous is "unsupportable: under standard principles of contract interpretation). Specifically, if the Fourth Proviso only excepts debt subordinate in right of payment, there is no purpose for the "in right of payment" carve-out in the Baseline Definition. We disagree with the lower courts' attempts to interpret away this superfluity [**16] by finding a distinction between "expressly" (in the Baseline Definition) and "by its terms" (in the Fourth Proviso). We see no meaningful distinction between those terms. Nevertheless, we also conclude that the Subordinated Notes holders' interpretation, that the Fourth Proviso unambiguously excludes the Second-Line Notes from the definition of Senior Indebtedness, is incorrect. As the lower courts correctly concluded, the Subordinated Notes holders' interpretation renders key parts of the Baseline Definition superfluous. Under their reading, that definition excludes from Senior Indebtedness only obligations subordinate "in right of payment," but the Fourth Proviso excludes all obligations that stand behind any type of other obligation. If so, the Baseline Definition's more limited carve-out for debt subordinate "in right of payment" would be unnecessary, because all such debt would be carved out from the definition of Senior Indebtedness by the Fourth Proviso. As the Subordinated Notes holders correctly acknowledge, "[for this indenture, it simply is not possible to avoid superfluity." 15-1771 Br. of Appellant 54 (internal quotation marks omitted). [HN4) Where, as here, varying interpretations rin render contractual language superfluous, we are not obligated to arbitrarily select one as opposed to another. Because the 2006 Indenture is open to differing reasonable interpretations as to whether the Second-Lien Notes constitute Senior Indebtedness, we conclude that it is ambiguous as a matter of law. 2 [HN5) Where a contract term is ambiguous, we look to extrinsic evidence to determine the intention of the parties. That evidence can include the parties' apparent intention, Walk-In Medical Centers, Inc. v. Breuer Capital Corp., 818 F.2d 260, 264 (2d Cir. 1987), what would be commercially reasonable, Fundamental Long Term Care Holdings, LLC v. For internal use only For internal use only CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0046950 CONFIDENTIAL SDNY_GM_00193134 EFTA01358963